12 OCTOBER 2020
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Air Transat is to become part of Air Canada, once a dream partnership, now less so with the devastating impact of the Covid-19 coronavirus on the air transport industry.
Air Canada and Transat AT, the parent company of Air Transat, have renegotiated the terms of their planned tie-up, sharply discounting the price per share valuing the transaction at C$190m rather than the C$720m originally agreed in August 2019.
The new terms are subject to Transat shareholder approval as well as that of the competition watchdogs, and is now expected to close in January or February 2021, the airline says.
Unconfirmed reports in Canada’s French-language media in June said Air Canada had been searching for a way to exit the deal due to liquidity issues as a result of the massive drop-off in demand due to the global health crisis.
“Covid-19 has had a devastating effect on the global airline industry, with a material impact on the value of airlines and aviation assets. Nonetheless, Air Canada intends to complete its acquisition of Transat, at a reduced price and on modified terms,” says Air Canada’s Chief Executive Calin Rovinescu.
“This combination will provide stability for Transat’s operations and its stakeholders and will position Air Canada, and indeed the Canadian aviation industry, to emerge more strongly as we enter the post-Covid-19 world,” he adds.
Rovinescu has been outspoken in his repeated criticism of the Government of Canada’s continued strict travel restrictions and quarantine requirements for inbound passengers, severely hampering the air travel industry’s recovery.
In March, Canada banned all non-nationals from entering the country, with few exceptions. All travellers coming to Canada by land, sea or air, including citizens, are required to go into a mandatory 14-day quarantine. Those found violating the restrictions can be subject to a fine of C$750,000, six months in jail and expulsion from the country.
The longest peaceful border in the world, between Canada and the USA, has been effectively sealed since 21 March.
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